For the Person with a Short Attention Span:
I get information each week on what is going on in Washington, D.C. and with the IRS. 90% of it is not very applicable (a lot is just political back and forth), but sometimes there is some interesting news to share.
I thought I would start sharing things that might be helpful to all of Credo’s client base. I will try to do this every couple months:
- It appears very likely that Congress will reinstate the expired tax breaks again for 2015. But, it’s a fair bet this won’t officially happen until the end of the year and that they won’t be made permanent.
- Consider using a SEP-IRA plan for 2014 if you still need deductions for 2014. If you filed for an extension, you have until October 15th to make a contribution that can be deducted in 2014.
- Be sure to fine-tune your estimated tax payments for 2015 if you owed for 2014 or expect to owe after this year. You can wait until year-end to boost withholdings if you are a W2 employee, because withheld tax is treated as if it was paid evenly throughout the year. You don’t need to prepay all the tax you owe for 2015, just an amount equal to 90% of it, or 100% of your 2014 tax bill (110% if your AGI was more than $150k in 2014). Doing this avoids underpayment penalties.
- Taxpayers have had sticker shock during the 2014 tax season. New tax rate hike phaseouts of tax breaks for “high” income earners may be mostly to blame. Here are some of the tax breaks that are hit by the new phaseout rules:
- Rental Property Losses
- Child Tax Credits
- Itemized Deductions
- Personal Exemptions
- Audit rates continue to decrease, currently running at 0.86%.